Brief Summary

Leave to appeal — Collateral challenge — Respondent sought leave to appeal against dismissal of its collateral challenge to applicant's claim for waste tyre management fee under the REDISA plan — Respondent contended that it was not bound by the plan despite signing a deed of adherence — Court found that the respondent was indeed bound by the plan and that its arguments regarding the deed and the fee's adjustment lacked merit — No reasonable prospect of success on appeal established.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerned an application for leave to appeal brought by the respondent in earlier proceedings, following a prior judgment delivered on 22 December 2021. In that earlier judgment, the High Court dismissed the respondent’s collateral (reactive) challenge raised as a defence to the applicant’s main application for payment.

The applicant was Recycling and Economic Development Initiative of South Africa NPC (REDISA), and the respondent was Tubestone (Pty) Ltd. The parties were referred to as in the main application.

The procedural history, as reflected in this judgment, was that REDISA had instituted motion proceedings seeking payment of the waste tyre management fee allegedly payable under the REDISA plan. Tubestone resisted the claim and advanced, as part of its opposition, a collateral challenge directed at the applicant’s administrative decision(s) and/or the ongoing imposition of the fee. The court dismissed that collateral challenge as a defence, and Tubestone then sought leave to appeal against the order and reasoning of 22 December 2021.

The general subject matter was the enforceability of obligations arising from the REDISA plan and related documentation (including a deed of adherence), the status and adjustment of the waste tyre management fee, and whether Tubestone could resist payment through a collateral challenge, including whether delay affected its entitlement to do so.

2. Material Facts

A central undisputed fact relied upon by the court was that Tubestone signed a deed of adherence on 18 January 2012, through its managing director, Mr Kruger. On the face of that deed of adherence, Tubestone confirmed that it subscribed to the plan and undertook to act in compliance with it at all times, including delivering monthly returns and complying with administrative requirements communicated by REDISA.

It was also material that Tubestone had, for a lengthy period, acted as a subscriber to the plan. The court relied on the fact that Tubestone had rendered returns for an extended time and had paid the fee for more than six and a half years before later objecting and withholding payment for a period described in the judgment as three months, while still providing returns.

A disputed contention (as framed by Tubestone) was that although it admitted subscribing and undertaking to comply with a “plan” referred to in the deed of adherence, the plan referred to was not the REDISA plan forming the basis of REDISA’s claim. The court treated the document’s content and Tubestone’s admissions as establishing that Tubestone had bound itself to the REDISA plan.

Another factual issue addressed concerned the status and amendment of the fee. The court relied on correspondence placed before it in reply, showing that in late 2013 REDISA proposed amendments to the plan, including a proposed amendment to clause 25.1 providing for an automatic increase of the waste tyre management fee in accordance with the CPI. The Department of Environmental Affairs responded on 29 January 2014 indicating the view that the plan did not need to be amended and taken through the review process. On the court’s reading of the correspondence, the fee accordingly remained at R2,30/kg.

The court also relied on the legal and historical fact (as stated with reference to authority) that the REDISA plan had been approved in November 2011, and that although the Minister purported to withdraw the approval on 26 January 2012, the Supreme Court of Appeal had held that the empowering legislation did not authorise such revocation once approval had been granted.

As to the collateral challenge, it was material that Tubestone raised it only in its answering affidavit in 2019, and that it did so on the basis (as summarised by the court) of complaints including an alleged failure to review the fee annually, alleged non-compliance with consultation requirements, and related objections to the fee’s constancy and non-adjustment.

3. Legal Issues

The central legal questions the court was required to determine were whether Tubestone’s proposed appeal met the statutory threshold for leave to appeal under section 17(1) of the Superior Courts Act 10 of 2013, namely whether there were reasonable prospects of success on appeal or some other compelling reason why the appeal should be heard.

Within that leave-to-appeal enquiry, the court had to assess whether its earlier findings were arguably wrong on the grounds advanced, including whether it erred in finding that Tubestone had signed the deed of adherence and undertook to adhere to the plan, whether its findings about the fee and the Department’s stance were wrong, whether it properly applied the law governing collateral challenges (including the relevance of delay and the significance of whether the measure was a law of general application), and whether it failed to apply the Plascon-Evans approach to factual disputes in motion proceedings.

The dispute primarily concerned the application of legal principles to largely common-cause facts, together with an assessment involving a value judgment/discretionary evaluation regarding whether delay was unreasonable and whether it should affect the availability or success of a collateral challenge in the circumstances.

4. Court’s Reasoning

The court approached the matter through the framework of section 17(1) of the Superior Courts Act, assessing whether the respondent had demonstrated reasonable prospects of success or other compelling reasons. It also considered and rejected the respondent’s contentions grounded in public interest and access to courts, finding those assertions unsupported on the facts of the matter as presented.

On the first ground of appeal concerning the deed of adherence, the court reasoned from the document itself (ex facie the deed of adherence) that Tubestone subscribed to the plan and undertook ongoing compliance obligations. The court treated the signature by the managing director and the terms of the deed as decisive against the contention that the deed did not bind Tubestone to the REDISA plan. In addressing an associated contention that the plan had been withdrawn, the court relied on authority holding that the Minister lacked power to revoke approval once given. On that basis, the court held that any suggested withdrawal after approval was legally incompetent, undermining Tubestone’s attempt to avoid the deed’s consequences by reference to withdrawal.

On the ground relating to the court’s earlier paragraph 73, concerning whether the fee required revision and the Department’s authority, the court considered the documentary record reflecting REDISA’s proposed amendments and the Department’s response. Although the Department’s letter did not expressly single out the fee, the court reasoned that, given the heading and content of the communication and the scope of the proposed amendments, the Department was dealing with the proposed fee adjustment among other amendments. The court accepted that the evidence indicated the Department’s view in January 2014 that the plan need not be reviewed, and that this encompassed not acceding to the proposed increase or adjustment, with the result that the fee remained at R2,30/kg. The court also found no factual or legal foundation laid for the respondent’s contention that the Department lacked authority in the manner asserted, and concluded that this ground did not show prospects of success.

In relation to the collateral challenge and the reliance on Merafong City v Anglogold Ashanti Ltd, the court emphasised that it had previously found Tubestone entitled to raise a collateral challenge in principle and was not legally precluded from doing so. The leave-to-appeal judgment nevertheless revisited the applicable approach, noting that the earlier judgment had engaged with the authorities on collateral (reactive) challenges and had specifically considered the test and discussion in Merafong, including the passages in which Cameron J drew distinctions relevant to when collateral challenges are allowed and when they may be constrained.

A key element in the court’s reasoning was the distinction between, on the one hand, a “classical” collateral challenge where a person is confronted with enforcement of an administrative act of general application not previously encountered, and, on the other hand, situations where the administrative act is directed at a particular person and where delay may feature in evaluating whether the collateral challenge should succeed. The court held that, on the facts before it, the plan and the fee determination were not properly characterised as a law or decision of general application in relation to Tubestone. It reasoned that Tubestone had voluntarily become a subscriber, had signed the deed of adherence, had performed for years without objection, and had knowledge of the fee since at least early 2012 or 2013. These considerations supported the court’s conclusion that delay was relevant and that Tubestone’s late collateral challenge did not align with the “blanket” approach it advanced.

The court further reasoned that even though the plan did not provide an internal appeal or remedy (a point it accepted as correct), Tubestone had an available alternative route: it could have pursued review proceedings under the Promotion of Administrative Justice Act 3 of 2000 (PAJA), including in relation to a failure to act. The court treated the availability of PAJA review as significant in assessing the appropriateness of the collateral challenge and the implications of delay. It stated that review would not have been inappropriate, but Tubestone failed or elected not to pursue that remedy. The court also stated that it had exercised a judicial discretion regarding the reasonableness of the delay in the earlier judgment, taking into account factors specific to the matter, and it was not persuaded that an appeal court would find that discretion not exercised, or exercised improperly.

On the ground based on the Plascon-Evans rule, the court reasoned that there were no genuine disputes of fact on the material aspects necessary to decide the application. It regarded it as effectively common cause that Tubestone had complied with the plan for years and then failed to pay the fee while still providing returns, and that the collateral challenge only emerged in 2019. Against that factual backdrop, the court concluded that the Plascon-Evans complaint did not demonstrate prospects of success.

Finally, when considering whether there were other compelling reasons for an appeal, the court rejected the respondent’s submission that public interest and access to courts warranted leave. It referred to the importance of finality in administrative decisions, the fact that consultation processes had concluded, and that SARS had taken over collection of the fee in 2017. It also found that the delays were considerable and that the prejudice to REDISA was substantial, while the dispute was limited to the respondent rather than raising a broader public-interest issue on the papers before it.

5. Outcome and Relief

The court dismissed the application for leave to appeal.

The court ordered the respondent to pay the applicant’s costs, including the costs of two counsel where so employed.

Cases Cited

Merafong City v Anglogold Ashanti Ltd 2017 (2) SA 211 (CC).

Retail Motor Industry Organisation and Another v Minister of Water and Environmental Affairs and Another 2014 (3) SA 251 (SCA).

Ramakatsa and Others v African National Congress and Another [2021] ZASCA 31.

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).

Legislation Cited

Constitution of the Republic of South Africa, 1996, section 195.

Promotion of Administrative Justice Act 3 of 2000, sections 1 and 6.

Superior Courts Act 10 of 2013, section 17(1)(a)(i) and section 17(1)(a)(ii).

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the respondent failed to satisfy the requirements for leave to appeal under section 17(1) of the Superior Courts Act. It found no reasonable prospects that another court would reach a different conclusion on the deed of adherence, the status and operation of the REDISA plan and fee, or the treatment of the collateral challenge (including the relevance and reasonableness of delay), and it rejected the contention that the Plascon-Evans rule assisted the respondent on the material facts.

The court also held that no compelling reason justified the appeal being heard, rejecting reliance on asserted public interest and access to court considerations on the facts presented. The application for leave to appeal was dismissed with costs, including costs of two counsel where employed.

LEGAL PRINCIPLES

The judgment applied the principle that leave to appeal is governed by section 17(1) of the Superior Courts Act 10 of 2013, requiring an applicant for leave to demonstrate reasonable prospects of success or some other compelling reason why the appeal should be heard. The court treated the statutory threshold as substantive and not satisfied by speculative or unsupported assertions.

The judgment applied principles governing collateral (reactive) challenges to administrative action, including the distinctions articulated in Merafong City v Anglogold Ashanti Ltd 2017 (2) SA 211 (CC). In particular, it applied the distinction between a classical collateral challenge raised when enforcement of an administrative act of general application is first confronted, and circumstances where the administrative act is directed at a party with prior knowledge and where delay may properly influence whether the collateral challenge can succeed as a defence.

The judgment affirmed that delay may be a relevant factor in evaluating a collateral challenge, particularly where the affected party has long been aware of the administrative decision and has acted in accordance with it for an extended period before raising the challenge. The court treated the reasonableness of such delay as a matter involving evaluative judgment and discretion on the specific facts.

The judgment applied the principle that where a party is aggrieved by administrative action or a failure to act, review under PAJA may be an available remedy, and the availability of such remedy may be relevant to assessing attempts to rely on a collateral challenge belatedly rather than pursuing review.

The judgment applied the motion-proceedings principle associated with the Plascon-Evans rule, holding that where there is no genuine dispute of fact on material issues, an argument premised on that rule will not establish prospects of success on appeal.

Recycling and Economic Development Initiative of South Africa NPC v Tubestone (Pty) Ltd (16077/19) [2022] ZAWCHC 86 (23 May 2022)